A recent engagement with a construction company demonstrates just how costly small errors in workers’ compensation audits can become over time. For many businesses, premiums are one of the largest fixed operating expenses, which makes accuracy in payroll classification essential for controlling costs and protecting cash flow.

During our review of the company’s prior audits, we discovered that while they regularly performed concrete flatwork on a portion of their projects, the appropriate classification code for that type of work had never been applied. Instead, auditors consistently used a more expensive code across the board. This oversight inflated premium costs year after year and went unnoticed because the audits otherwise appeared routine.

We worked closely with the client to gather payroll records that documented the scope of their flatwork operations. Once compiled, we presented the case to both the insurance carrier and the state rating authority. The audits were revised, the proper classification applied, and the result was $44,000 in refunds for overpaid premiums. Even more importantly, the correction ensures that their premiums will be calculated correctly moving forward, delivering long-term savings.

This case highlights why business owners and CFOs should never assume their audits are flawless. A detailed review can uncover hidden errors and return significant dollars back to the bottom line.